CFPB Director Testifies Before Congress

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CFPB Director Rohit Chopra testified this week before both Senate Banking and House Financial Services Committees regarding the Bureau’s Semi-Annual Report. Both hearings had contentious moments. Republicans continue to define the Agency as “unaccountable” and accuse Director Chopra of pursuing “Democrats progressive crusade” and worsening “regulation by enforcement”. Democrats on the other hand praised Director Chopra’s strong consumer protection initiatives, cracking down on large financial firms, and impact of medical debt on credit reports. Other issues discussed included student loans, Buy Now, Pay Later, FDIC/Banks, Housing and Fintech. Debt collection however did not receive a lot of attention during these hearings.
Key Takeaways and Themes: 
  • CFPB is working to ensure the markets are fair, transparent, and competitive.
  • Concerns about how the US is heading towards a market structure where technology and finance comingle, fueled by uncontrolled flows of data and surveillance.
  • CFPB’s focus on repeat offenders and large players engaged in large-scale harm instead of investigating small firms.
  • CFPB’s  intent to dramatically increase issuance of guidance by pointing to either already clear legal requirements or providing more clarity where necessary.

Small Business Lending - Data Collection Rulemaking:

  • Director Chopra noted protecting small businesses is about protecting the US economy and the country with an overarching goal of consumer protection while minimizing costs. Concerns raised included anti-competitive rulemaking, rule should be subject to a thorough cost-benefit analysis framework, increased costs of small business credit and undue burdens placed on small lenders.

Medical Debt/Credit Reports:

  • Director Chopra stated medical debt is not a predictor of credit performance on other loan obligations and noted challenges associated with accuracy, health privacy and whether it is even lawful to include this information at all. He further mentioned there must be a competitive market for all financial products. Consumers should be able to compete up front on what those costs are.

“Junk Fees”:

  • While some argued that this term is subjective, Director Chopra defined junk fees as those that are not subject to the full competitive process.

Student Loans:

  • Director Chopra intends to protect student loan borrowers by ensuring an accurate process and options for repaying student loans are provided.

UDAAP:

  • Per Director Chopra, disparate impact is not part of UDAAP, but part of certain specific laws, including the Equal Credit Opportunity Act that the CFPB enforces.